- 12 - respondent’s determination as to the section 72(t) additional tax. C. Accuracy-Related Penalty Pursuant to section 6662(a), respondent determined an accuracy-related penalty of 20 percent of the amount of the underpayment attributable to a substantial understatement of tax. In the alternative, respondent imposed the accuracy-related penalty on the amount of the underpayment due to negligence or disregard of the rules and regulations. Respondent’s determinations are presumed to be correct, and petitioner bears the burden of proving that the accuracy-related penalty does not apply. See Rule 142(a). A substantial understatement of tax is defined as an understatement of tax that exceeds the greater of 10 percent of the tax required to be shown on the return or $5,000. See sec. 6662(d)(1)(A). The understatement is reduced to the extent the taxpayer has (1) adequately disclosed his or her position and has a reasonable basis for the tax treatment of the item, or (2) has substantial authority for the tax treatment of the item. See sec. 6662(d)(2)(B). Section 6662(c) defines “negligence” as any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code, and “disregard” as any careless, reckless, or intentional disregard.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011